0.3% 3. 2.3% 6.4% 5.9% 8.8% 8. 8. 11.4% 10.2% 11. 15. West Bengal Budget Analysis The Finance Minister of West Bengal, Dr. Amit Mitra presented the Budget for financial year on January 31, 2018. Budget Highlights The Gross State Domestic Product of West Bengal for (at current prices) is approximately Rs 10,48,678 crore. This is estimated to be 1 higher than the estimate for. Total expenditure for is estimated to be Rs 1,95,829 crore, a 5.2% increase over the revised estimate of. In, there was an increase of Rs 3,701 crore (2%) of expenditure in the revised estimate over the budget estimate. Total receipts (excluding borrowings) for are estimated to be Rs 1,48,834 crore, an increase of 3.3% as compared to the revised estimates of. In, total receipts exceeded the budgeted estimate by Rs 10,667 crore. Zero revenue deficit has been estimated for the next financial year. Fiscal deficit is targeted at Rs 23,805 crore (2.2% of state GDP). Departments of School Education, Panchayats and Rural Development, Urban Development and Municipal Affairs, and Health and Family Welfare saw the highest allocations. Policy Highlights Farmer related measures: Farmers selling agricultural land for agricultural purposes exempt from paying mutation fee. A corpus of Rs 100 crore has been created to protect farmers from distress sale due to fall in prices. Pension for old farmers to be increased from Rs 750 to Rs 1,000 and the number of beneficiaries to be increased by 34,000 to cover one lakh farmers in total. Tax exemption: Stamp Duty has been reduced by 1% in urban and rural areas for all properties valued from Rs 40 lakh to one crore rupees. The existing exemption of electricity duty will automatically be available to an eligible industrial entity from the date of commencement of commercial operations, without the need of a separate exemption certificate. Tea industry: Tea gardens exempted from payment of agricultural income tax for the next two years. They have also been exempted from payment of Education and Rural Development Cess for. Introduction of certain schemes: Under the Rupashree scheme, extension of one-time assistance of Rs 25,000 will be provided to family of girls with an annual income of up to Rs 1.5 lakh for the purpose of their marriage. An amount of Rs 1,500 crore has been allocated for it. Another scheme, Manabik has been announced to provide monthly pension of Rs 1,000 to two lakh persons with disabilities. West Bengal Economy Economic growth: Between 2015-16 and (A), the annual growth rate (at constant prices) of the state GDP has increased from 5.8% to 11.4%. Sectoral share: Services lead the contribution to the GSDP at 5, followed by industry (2) and agriculture (19%). Industrial contribution to state GDP has been constant in the range of 2. Agriculture has noted a decline. Per Capita Income: The state s Per Capital Income (at constant prices) has grown from Rs 57,584 in 2015-16 to Rs 67,783 in (A). Figure 1: Growth in GSDP and sectors (2011-12 prices) 18% 12% Agriculture, Forestry & Fishery Industry Services GSDP (growth rate) 2015-16 2016-17 (P) (A) Source: Economic Review, Government of West Bengal; PRS. Note: P-Provisional Estimates; A-Advance Estimates Nivedita Rao nivedita@prsindia.org February 1, 2018 For more information on this subject, please contact Vibhor Relhan at 9050922538 or email at vibhor@prsindia.org
West Bengal Budget Analysis Budget Estimates for The total expenditure in is estimated to be Rs 1,95,829 crore. This is 5.2% higher than the revised estimates of. This expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,48,835 crore and borrowings of Rs 46,991 crore. During, borrowings of the West Bengal government were 14.2% lower than the budget estimate. Total receipts for (other than borrowings) are expected to be 3.3% higher than the revised estimate of. Table 1: Budget - Key figures (in Rs crore) Items 2016-17 Actuals Revised % change from BE to RE of % change from RE to BE Total Expenditure 1,57,548 1,82,297 1,85,998 2% 1,95,829 5.2% A. Borrowings 36316 48,917 41937-14.2% 46,991 12% B. Receipts (except borrowings) 1,21,041 1,33,375 1,44,042 8% 1,48,835 3.3% Total Receipts (A+B) 1,57,357 1,82,292 1,85,979 2% 1,95,826 5.2% Revenue Deficit -16,085 0-11,006-0 - As % of state GDP 1.62% 1.11% - - Fiscal Deficit -25,385-19,351-29,698 53.4% -23,805-19.8% As % of state GDP 2.5 1.9 3% 2.27% Notes: BE is Budget Estimate; RE is Revised Estimate. - sign indicates deficit; + indicates surplus. GSDP for has been calculated using the fiscal deficit s share in the GSDP and the absolute figure of the fiscal deficit. Sources: West Bengal Budget Documents ; PRS. Expenditure in Capital expenditure for is proposed to be Rs 47,211 crore, which is an increase of 12. over the revised estimates of. This includes expenditure which affects the assets and liabilities of the state, and leads to creation of assets (such as bridges and hospital), and repayment of loans, among others. Revenue expenditure for is proposed to be Rs 1,48,618 crore, which is an increase of 3.1% over revised estimates of. This expenditure includes payment of salaries, maintenance, etc. In, West Bengal is expected to spend Rs 47,720 crore on servicing its debt (i.e., Rs 20,583 crore on repaying loans, and Rs 27,137 in crore on interest payments). This is 0.9% higher than the revised estimates of. Table 2: Expenditure budget (in Rs crore) Item 2016-17 Actuals Revised % change from BE to RE % change from RE to BE Capital Expenditure 23,630 39,652 41,958 5.8% 47,211 12. Revenue Expenditure 1,33,918 1,42,644 1,44,040 0.9% 1,48,618 3.1% Total Expenditure 1,57,548 1,82,296 1,85,998 2. 1,95,829 5.2% A. Debt Repayment 11,096 19,497 19,677 0.9% 20,583 4. B. Interest Payments 25,703 25,843 27,596 6.7% 27,137-1. Debt Servicing (A+B) 36,799 45,340 47,273 4.2% 47,720 0.9% Sources: West Bengal Budget Documents ; PRS. Between 2011 and 2016, West Bengal spent 8 of the amount it had estimated at the budget stage. This implies an under-spending of 1. Salaries and pension payments together constitute Rs 57,787 crore of the revenue expenditure (39%). In addition, the state is expected to spend Rs 6,648 crore on subsidies, which constitutes 4. of the revenue expenditure. February 1, 2018-2 -
West Bengal Budget Analysis Sector expenditure in The departments listed below account for 4 of the total budgeted expenditure of West Bengal in. A comparison of West Bengal s expenditure on key sectors with 18 other states can be found in the Annexure. Table 3: Sector-wise expenditure for West Bengal Budget (Rs crore) 2016-17 % change from RE Department Actuals Revised to BE School Education Panchayats and Rural Development Urban Development and Municipal Affairs Health and Family Welfare Food and Supplies Home and Hill Affairs Women and Child Development and Social Welfare Public Works 18,597 24,038 20,900 24,722 18% 14,863 16,909 18,670 19,063 2% - 9,638 9,487 10,013 8,122 7,596 8,902 8,770-1% 8,152 7,533 8,791 8,037-9% - 7,268 7,225 7,956 1-5,051 5,758 5,183-1 3,271 4,004 5,474 5,008-9% % of total 34% 4 4 4 expenditure Note: All amounts are net numbers. Sources: West Bengal Budget Documents ; PRS. Sectoral highlights Improvement in Pupil Teacher Ratio from 29 to 22 for primary schools, and 49 to 42 at upper primary level. The ratio indicates the number of students per teacher. Employment under National Rural Employment Guarantee Scheme has recorded 23.6 crore person days (as of December, 2017), surpassing the annual target of 23 crore person days. Nine lakh individual household latrines have been constructed; Rs 821 crore was released till January, 2018 for this purpose. A new scheme, Banglar Bari to construct 20,000 flats for the urban poor within the next four years. Online system of paying property tax in municipal cities will be extended to all urban local bodies. The rate of institutional delivery has increased to 9. The Infant Mortality Rate has reduced to 25 per 1,000 live births. Upgradation of operation theatres, labour rooms, rural hospitals, among others to be undertaken at a cost of Rs 133 crore. Additional food storage capacity of five lakh MT to be added in next three years. 15 lakh digitised ration cards to be distributed during. Revenue expenditure on district police for 2018-19 is estimated at Rs 3,965 crore. Capital expenditure on state police for is budgeted at Rs 422 crore. Emphasis laid on adoption of new age technology and acclimatisation of existing personnel in matters related to cybercrime. Under the department, child welfare has been allocated 1,455 crore, and women welfare has been allocated Rs 920 crore. The Special Nutrition Programme has been allocated Rs 901 crore. Capital expenditure allocated for State Highways and District and Other Roads is Rs 2,333 crore and Rs 1,629 crore respectively. 3,100 km of roads taken over from Zilla Parishads and Municipalities to be upgraded within the next year. February 1, 2018-3 -
West Bengal Budget Analysis Receipts in The total revenue receipts for are estimated to be The total collection of own tax revenue Rs 1,48,618 crore, an increase of 11.7% over the revised receipt has doubled from Rs 21,128 crore estimates of. Of this, Rs 58,596 (39% of the to Rs 45,466 crore during the period 2010- revenue receipts) crore will be raised by the state through 11 to 2016-17. its own resources, and Rs 88,152 crore (59% of the revenue receipts) will be devolved by the centre in the form of grants and the state s share in central taxes. Non Tax Revenue: West Bengal has estimated to generate Rs 3,395 crore through non-tax sources in 2018-19. Of the total non-tax revenues, revenue from interest receipts and non-ferrous mining and metallurgical industries contribute the most. Table 4: Break up of state government receipts (Rs crore) Item 2016-2017 Actuals 2017-2018 Revised % change from BE to RE 2018-2019 % change from RE to BE State's Own Tax 45,466 55,787 50,070-10.2% 55,201 10.2% State's Own Non-Tax 2,950 2,221 3,173 42.9% 3,395 7. Share in Central Taxes 44,625 49,510 49,510 0. 55,437 12. Grants-in-aid from Centre 24,791 35,126 30,280-13.8% 32,714 8. Additional resources - - - - 1,870 - Total Revenue Receipts 1,17,832 1,42,644 1,33,034-6.7% 1,48,618 11.7% Borrowings 36,316 48,917 41,937-14.3% 46,991 12.1% Other receipts 3,209-9,269 11,008-218.8% 217-98. Total Capital Receipts 39,525 39,647 52,945 33. 47,208-10.8% Total Receipts 1,57,357 1,82,292 1,85,979 2. 1,95,826 5.3% Sources: West Bengal Budget Documents ; PRS. Tax Revenue: Total own tax revenue of West Bengal is estimated to be Rs 55,201 crore in. The composition of the state s tax revenue is shown in Figure 2. The tax to GSDP ratio is targeted at in, which is in the same range as the revised estimate of in. This implies that growth in collection of taxes has been at par with the growth in the economy. Figure 2: Composition of Tax Revenue in Electricity Tax, Stamp Duty, 9% Sales Tax, 13% Vehicle Tax, Others, 2% Land Revenue, State Excise, 19% SGST, 24% IGST, 18% As per the estimates of, State Goods and Services Tax (SGST) will be the largest component of the state s tax revenue. It is expected to generate Rs 13,094 crore. Further, the government is expected to generate Rs 10,503 crore through state excise duty. This is an increase of 21% over the revised estimates of. In addition, revenue will be generated through Integrated Goods and Services Tax (18%), sales tax (13%), stamp duties on real estate transactions (9%), electricity tax (), land revenue (), and taxes on vehicles (). West Bengal witnessed a short fall in tax collections during. Revised estimates for the year indicate that the tax collections were 1 lower than the budget estimates. Collection from taxes and duties on electricity saw a 2 drop at the revised estimate stage. February 1, 2018-4 -
West Bengal Budget Analysis Deficits, Debts and FRBM Targets for The West Bengal Fiscal Responsibility and Budget Management (FRBM) Act, 2010 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government. Revenue deficit: It is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets. The budget estimates a zero revenue deficit. This implies that revenue receipts are expected to be equal to the revenue expenditure. Note that this indicates that the state expects to meet the target of eliminating revenue deficit, as prescribed by the 14 th Finance Commission. Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities. In, fiscal deficit is estimated to be Rs 23,805 crore, which is 2.2% of the GSDP. The estimate is within the 3% limit prescribed by the 14 th Finance Commission. Debt Stock: It is the accumulation of borrowings over the years. In, the debt stock is expected at 37. of the GSDP. Table 5: Budget targets for deficits for West Bengal in (% of GSDP) Year Revenue Fiscal Deficit (-)/Surplus (+) Deficit (-)/Surplus (+) Debt Stock 2016-17 -1.62% -2.5 34.1% RE -1.11% -3.0 36.7% BE -1.9 36.9% -2.27% 37. Sources: West Bengal Budget Documents ; PRS. Figures 3 and 4 show the trend in deficits and debt stock from 2016-17 to : Figure 3: Revenue and Fiscal Deficit (as % of GSDP) 2016-17 RE BE 0. -0. -1. -1. -2. -2. -3. -3. -1. -2. Revenue Deficit -1.1% -3. Fiscal Deficit Sources: West Bengal Budget Documents ; PRS. -2.3% Figure 4: Debt Stock (as % of GSDP) 4 3 3 2 2 1 1 Debt as a percentage of GSDP has come down from 40. to 34.1% during the period 2010-11 to 2016-17. From 2016-17 onwards, this percentage has been noted to be increasing. 34.1% 36.8% 37. 2016-17 RE BE Sources: West Bengal Budget Documents ; PRS. DISCLAIMER: This document is being furnished to you for your information. You may choose to reproduce or redistribute this report for non-commercial purposes in part or in full to any other person with due acknowledgement of ( PRS ). The opinions expressed herein are entirely those of the author(s). PRS makes every effort to use reliable and comprehensive information, but PRS does not represent that the contents of the report are accurate or complete. PRS is an independent, not-for-profit group. This document has been prepared without regard to the objectives or opinions of those who may receive it. February 1, 2018-5 -
West Bengal Budget Analysis Annexure The charts below compare West Bengal s expenditure on key sectors as a proportion of its budget, with 18 other states. 1 Education: West Bengal has allocated 18.2% on education in. This is higher than the average expenditure allocated to education by 18 other states (using. Health: West Bengal has allocated 4. of its total expenditure on health, which is marginally lower than the average expenditure of 18 other states. Agriculture: The state has allocated 3.7% of its total budget on agriculture. This is significantly lower than the allocations of 18 other states (6.4%). Rural development: West Bengal has allocated 10. of its expenditure on rural development. The average of 18 other states is 5.. 2 Spending on education as a % of total budget 16.4% 18.7% 16.3% 18.2% 16.1% 4% Spending on health as a % of total budget 4.8% 4.2% 4. 4. 4.8% 1 3% 2% 1% 2016-17 ( 2016-17 ( 7% 4% 3% 2% 1% Spending on agriculture as a % of total budget 2.7% 2016-17 3.7% 3. 3.7% 6.4% ( 12% 1 8% 4% 2% Spending on rural development as a % of total budget 8.8% 9. 2016-17 10.4% 10. 5. ( Source: Annual Financial Statement ( and ), various state budgets; PRS. 1 The 18 states apart from West Bengal are: Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Haryana, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, and Uttar Pradesh. February 1, 2018-6 -